Claimant having benefit of right of pre-emption in respect of sale of land — Claimant failing to exercise right — Owner of land entering into contract for sale with defendant — Claimant subsequently exercising its right to purchase — Whether right of pre-emption taking precedence over contract for sale — Claim allowed
Land used by Coventry Football Club (Rugby Union) was acquired by trustees for the club in 1920. In 1996, the trustees granted a third party a right of pre-emption over the property. By that agreement, the club was under an obligation to notify the third party of any intention to dispose of, or sell, club property, and to give the third party a first option to purchase.
In 1998, the trustees informed the third party of the club’s intention to sell the ground. The third party did not reply to the notice and the club entered into a contract for sale with the defendant (the first contract). The club was then wound up, and joint liquidators were appointed. They contracted to sell the ground to associates of the defendant (the second contract), and informed the third party of the proposed sale. The third party indicated its intention to purchase the land, assigning its rights in the matter to the claimant. It was common ground that the club’s obligation to the claimant took priority over the second contract.
The claimant sought registration of its title to the property free of any interest of the defendant. However, the defendant contended that the first contract, which was entered into on the basis that the claimant had failed to assert its rights under the first notification of sale or disposal, was valid and should have been honoured.
Held: The claim was allowed.
Had the first contract been unconditional, it would have enjoyed priority over the later exercise of the claimant’s right of pre-emption. However, the defendant’s agreement contained a condition precedent so that it took effect only if the claimant chose not to exercise its right. In any event, the club’s obligation in respect of the pre-emption agreement would cease only when a sale was completed and any further sale or disposition by the club was impossible, so entering into the first contract did not discharge the club’s obligation. Accordingly, the pre-emption agreement remained in force and took priority over the first contract.
Guy Fetherstonhaugh QC (instructed by Mischcon de Reya) appeared for the claimant; Jeremy Cousins QC and Patrick Darby (instructed by Wood Glaister Partnership, of Solihull) appeared for the defendant.
Vivienne Lane, barrister
